Rating Action: Moody’s affirms ABC Fitness Solutions’ Caa1 CFR and changes outlook to stableGlobal Credit Research – 29 Apr 2021New York, April 29, 2021 — Moody’s Investors Service, (“Moody’s”) changed the ratings outlook for Project Accelerate Parent, LLC (ABC Fitness Solutions) to stable from negative. At the same time, Moody’s affirmed ABC Fitness Solutions’ Corporate Family Rating (CFR) of Caa1, Probability of Default Rating (PDR) of Caa1-PD and Caa1 rating on the senior secured bank credit facilities.”The change in the outlook to stable reflects the expected recovery in ABC Fitness Solutions’ revenue and profitability over the next 12 months supported by the coronavirus vaccines rollout and reopening of fitness clubs”, said Mariya Moore, Moody’s analyst.Affirmations:..Issuer: Project Accelerate Parent, LLC…. Corporate Family Rating, Affirmed Caa1…. Probability of Default Rating, Affirmed Caa1-PD….Senior Secured Bank Credit Facility, Affirmed Caa1 (LGD4)Outlook Actions:..Issuer: Project Accelerate Parent, LLC….Outlook, Changed To Stable From NegativeRATINGS RATIONALEThe Caa1 CFR reflects ABC Fitness Solutions’ very high leverage with adjusted debt/EBITDA of over 12x (expensing software development costs) and negative free cash flow, resulting from a 30% decline in revenue and a 50% contraction of EBITDA in 2020 (preliminary results). After hitting the trough in Q2 2020, the company’s topline and profitability have been recovering quarter over quarter. Moody’s anticipates a strong rebound in revenue in 2021; however, the economic environment for fitness clubs remains challenging. There is high uncertainty of the timing of paid membership levels recovering to pre-pandemic levels. At the same time, Moody’s expects ABC Fitness Solutions to increase investments in sales, marketing and research and development that would strengthen its club management platform and services and accelerate revenue growth. These investments will weigh on the company’s operating profit growth in 2021 and slowdown the deleveraging.ABC Fitness Solutions benefits from its strong relationships with the fastest growing fitness club chains and high customer retention rates. The mission critical and low cost nature of its software and billing services also support the rating. In the past twelve months, ABC Fitness Solutions completed three acquisitions (GymSales, Trainerize and Fitness BI) that helped the company to create an integrated suite of solutions for club management, including member acquisition, member management, member engagement, club administration, reporting and analytics, and revenue-cycle management. Moody’s expects these purchases to be highly accretive, which should help drive the company’s revenue growth. Funded with a combination of cash equity and company’s cash, these acquisitions had a positive impact on leverage.The stable outlook reflects Moody’s expectation for a significant recovery in ABC Fitness Solutions’ revenue and profitability over the next 12 months, as well as adequate liquidity. Moody’s projects leverage to remain around current levels in 2021, but to improve to around 8x by the end of 2022 as the fitness industry continues to recover from the pandemic.ABC Fitness Solutions’ adequate liquidity is supported by $33 million of unrestricted cash and availability under a $50 million revolving credit facility due January 2023 ($25 million undrawn). These sources of liquidity will be sufficient to cover a $3.8 million mandatory term loan amortization, estimated deferred considerations for the past acquisitions and projected negative free cash flow over the next 12 months. The company amended its credit agreement and received relief for its springing leverage covenant for a period through April 1, 2022 and established a minimum $10 million liquidity (consisting of unrestricted cash and unused revolver) requirement during the covenant relief period.The coronavirus outbreak, the government measures put in place to contain it, and the weak global economic outlook continue to disrupt economies and credit markets across sectors and regions. Although an economic recovery is underway, it is tenuous and its continuation will be closely tied to containment of the virus. As a result, the degree of uncertainty around our forecasts is unusually high. Moody’s regards the coronavirus outbreak as a social risk under our ESG framework, given the substantial implications for public health and safety. Specifically, the weaknesses in ABC Fitness Solutions’ credit profile, including its exposure to discretionary consumer spending have left it vulnerable to shifts in market sentiment in these unprecedented operating conditions and the company remains vulnerable to the ongoing coronavirus pandemic and social distancing measures. Moody’s expects the coronavirus concern for fitness clubs will gradually ease over the next year once a growing share of the public has been vaccinated.Governance considerations include the company’s private equity ownership. Companies owned by private equity sponsors tend to have aggressive financial policies favoring very high leverage, shareholder-friendly policies and limited financial disclosures.FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGSThe ratings could be upgraded if ABC Fitness Solutions’ revenue and earnings improve materially leading to a reduction in leverage with Moody’s adjusted debt/EBITDA trending toward 7.5x, while producing positive free cash flow.The ratings could be downgraded if Moody’s expects ABC Fitness Solutions’ operating performance or liquidity will deteriorate, deleveraging will be delayed beyond 2022, or ability to service the company’s debt becomes impaired.The principal methodology used in these ratings was Business and Consumer Service Industry published in October 2016 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1037985. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.Based in Sherwood, Arkansas, and controlled by financial sponsor Thoma Bravo, ABC Fitness Solutions provides gym, health club, and fitness studio management and billing software and services to clients in the U.S, Mexico, and Canada. Pro forma revenue in 2020 was $161 million.REGULATORY DISCLOSURESFor further specification of Moody’s key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. 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Please refer to Moody’s Policy for Designating and Assigning Unsolicited Credit Ratings available on its website www.moodys.com.Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.Moody’s general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1263068.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody’s affiliates outside the EU and is endorsed by Moody’s Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody’s office that issued the credit rating is available on www.moodys.com.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody’s affiliates outside the UK and is endorsed by Moody’s Investors Service Limited, One Canada Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the UK. Further information on the UK endorsement status and on the Moody’s office that issued the credit rating is available on www.moodys.com.Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody’s legal entity that has issued the rating.Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating. Mariya Moore Analyst Corporate Finance Group Moody’s Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A. 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